Financial Commentary – Public

UNEMPLOYMENT TOOK A SURPRISING TURN DOWNWARD WITH LAST MONTH’S REPORT RELEASED ON FRIDAY.  GIVEN THE STATISTICAL MANIPULATION (SEASONAL SMOOTHING) AND REVISIONS THAT HAPPEN REGULARLY, THE REPORT IS TO BE TAKEN WITH SOME GRAINS OF SALT. STILL, WE MAY HAVE SEEN A MEANINGFUL DECELERATION IN THIS IMPORTANT NEGATIVE TREND.  RISING EMPLOYMENT IS THE CORNERSTONE OF A […]

IRA Conversions
If you’re a high-income earner and haven’t been able to contribute to a Roth IRA to date, you’ll soon get your chance. Beginning next year, investors of all income levels will be able to convert a traditional IRA to a Roth, thereby ensuring tax-free withdrawals and no required minimum distributions in retirement. Individuals […]

The Financial Times (ft.com) features a podcast that discusses a unique concept: refunding to clients the trailing commissions paid to brokers. Many investors with traditional brokerage firms may not be aware that their advisor receives Section 12B-1 fees from certain mutual funds.  Should this money be refunded to you, the investor?
Well,apparently in Great Britain, […]

Berkshire Hathaway, Warren Buffet's investment vehicle announced today it would take 100% control of one of the nation's largest railways, Burlington Northern Santa Fe (BNI).Trusted Financial holds, in most client portfolios, a position in Berkshire Hathaway, and this commentator has personally held a position in the company for some 12 years. Today's acquisition, Berkshire's largest is not something I applaud, but it is revealing when one considers the evolution of investment style of the greatest investor of our Age. As a child in Omaha, Nebraska, Warren Buffet commented to a friend who lived on a busy thoroughfare, that he wished they could find a way to erect a toll booth and collect money for every car that passed.  Buffet's desire to own businesses that have an effective monopoly, like a toll bridge, has been chronicled in books like Roger Lowenstein's "Warren Buffet, the Making of an American Capitalist", a 1995 work that I am in the midst of re-reading.  Earlier this year I read the massive "The Snowball" (Alice Schroeder,(C) 2008, Bantam Books).  From what I've learned of this focused capitalist,  I'm not surprised by today's announcement, but as one who tends to subscribe to a purer form of Graham-Dodd value investing, the choice worries me. 

With major stock indexes reaching 12 month highs, day after day, there is a palpable underlying buzz of excitement returning to investors.  No one is more delighted than Yours Truly to watch our client portfolios chalk up gains surpassing, in most cases their pre-Crash levels.  Still, let us recall how desperate things looked only a year ago.  Reproduced below is an e-mail I send to our clients on October 13, 2008:

"Everything you know is Wrong" was the title of a record album issued in the late 1960's by the Firesign Theater, a Los Angeles based radio comedy troupe.  This phrase has rattled around in my head of late as I watch gold , oil  and commodity prices following financial company stocks, plummeting like a sky diver who forgot his parachute.  Our usual mix of disparate asset classes, designed to reduce portfolio volatility, has been only...

Forbes today reported a state court case that may upset the established order when it comes to asset protection for IRA's.  Federal legislation has exempted up to $1,000,000 of IRA assets from attachment by creditors.  When I as a financial planner discuss the advisability of rolling money out of a qualified savings plan (401K, 403B or 457), one reason cited, tho not the top reason, is asset protection.  Qualified plans are more exposed to collection by creditors than IRA's. But wait....

A client, on the phone, spontaneously thanked me yesterday for the fact that his account had recovered from one year ago. So I took a sampling of client accounts to see where they stand over the same time period covered in the CNBC story: not too bad. Most are off about 3%.

The New York Times today tallied up repayments to Uncle Sam for loans made late last year to prevent the banking system from collapsing, after Lehman Brothers was allowed to fall, weighed down with toxic loans and reckless leverage. While free marketeers like myself would in principal,prefer less, not more government involvement in the Market, this article reveals that thereisa place for government when an emergency strikes.

August 24, 2009 - I met with clients this weekend, a relatively young couple who have been steadily saving for retirement.  They did not exhibit the sense of bewilderment and fear shown by a few clients earlier in the year (although from darned few, I'm proud to report). Rather, their vision is clear: continue to build wealth by saving regularly and confine spending to necessities. Live a comfortable retirement, with the hope of leaving a legacy to their children and grandchildren.  I was surprised when the wife did not advocate a strategy of retreat. There were no questions like "wouldn't it be smart to just buy CD's?"  Often wives are the more conservative half of a couple.  But this wife reminded me

One of the worst market collapses in a century has left many, especially Baby Boomers reeling - their dreams for retirement shattered by twin devaluations of their homes and their retirement savings.  Those who suffered the most are those who were not given guidance by a financial professional, or who did not seek such advise.  The latter group is a growing component of investors. Armed with high speed internet connections and egged on by discount brokerages offering dirt cheap commissions to "frequent traders", a significant number of self managers have learned the hard way that investing is not a sport but serious business. 

As of mid-August 2009, our clients in general are off about 10% from the US stock market's all time high, recorded in October 2007. By comparison, the Dow Jones Industrial Average has shed over 30% of its value.  We've significantly beaten all major averages except for a bond-only strategy since becoming part of the independent investment advisor world in early 2001. You are welcome to hear the details by contacting our office at 949 249 2057.